SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

(Mark  One)

 X     Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
---    of  1934
       For  the  quarterly  period  ended  June  30,  2008.
                                           ---------------

                                       or

       Transition  Report  under Section 13 or 15(d) of the Securities Exchange
---    Act  of  1934
       For  the  transition  period  from  _______________  to  _______________.

                          Commission File No.  0-23980
                                               -------

                    Southeastern Bank Financial Corporation
                    ---------------------------------------
             (Exact name of registrant as specified in its charter)

              Georgia                               58-2005097
              -------                               ----------
     (State of Incorporation)            (I.R.S. Employer Identification  No.)

                   3530 Wheeler Road, Augusta, Georgia 30909
                   -----------------------------------------
                    (Address of principal executive offices)

                                 (706) 738-6990
                                 --------------
                (Issuer's telephone number, including area code)

                                 Not Applicable
                                 --------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

     Check  whether  the  issuer:  (1) filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X  No
                                                                      ---   ---

     Check  whether  the  issuer  is  a  large accelerated filer, an accelerated
filer,  or  a  non-accelerated  filer.  See definition of "accelerated filer and
large  accelerated  filer"  in  Rule  12b-2  of  the  Exchange  Act.

     Large  accelerated  filer  [ ]     Non-accelerated  filer  [ ]
                                        (do  not  check  if  a smaller
                                             reporting company)

     Accelerated filer [X]              Smaller reporting company [ ]

     Indicate  by  check  mark  whether  the  registrant  is a shell company (as
defined  in  Rule  12b-2  of  the  Exchange  Act):  Yes       No    X
                                                         ---       ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date:

     5,974,850 shares of common stock, $3.00 par value per share, outstanding as
of  July  31,  2008.


<PAGE>
                    SOUTHEASTERN BANK FINANCIAL CORPORATION
                                   FORM 10-Q
                                     INDEX
<TABLE>
<CAPTION>
<S>                                                                               <C>
                                                                                   Page
Part I
      Item 1.   Financial Statements (Unaudited)

                Consolidated Balance Sheets as of June 30, 2008 and
                  December 31, 2007                                                   3

                Consolidated Statements of Income for the Three and Six
                  Months ended June 30, 2008 and 2007                                 4

                Consolidated Statements of Cash Flows for the
                  Six Months ended June 30, 2008 and 2007                             5

                Notes to Consolidated Financial Statements                            6

      Item 2.   Management's Discussion and Analysis of
                Financial Condition and Results of Operations                        11

      Item 3.   Quantitative and Qualitative Disclosures about Market Risk           26

      Item 4.   Controls and Procedures                                              26

Part II  Other Information

      Item 1.   Legal Proceedings                                                     *

      Item 1A.  Risk Factors                                                         27

      Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds          27

      Item 3.   Defaults Upon Senior Securities                                       *

      Item 4.   Submission of Matters to a Vote of Security Holders                  28

      Item 5.   Other Information                                                     *

      Item 6.   Exhibits                                                             29

Signature                                                                            30

</TABLE>
* No information submitted under this caption.


                                        1
<PAGE>
                                     PART I
                             FINANCIAL INFORMATION


                                        2
<PAGE>
            SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

                          Consolidated Balance Sheets
                   (Dollars in thousands, except share data)
<TABLE>
<CAPTION>
                                                              June 30,
                                                                2008       December 31,
                             Assets                          (Unaudited)        2007
                                                            ------------  --------------
<S>                                                         <C>           <C>
Cash and due from banks                                     $    30,797   $      24,558
Federal funds sold                                                2,900               -
Interest-bearing deposits in other banks                            500             500
                                                            ------------  --------------
      Cash and cash equivalents                                  34,197          25,058

Investment securities
  Available-for-sale                                            250,230         245,429
  Held-to-maturity, at cost (fair values of
    $700 and $1,467, respectively)                                  689           1,435

Loans held for sale                                              19,372          11,303

Loans                                                           948,745         871,440
  Less allowance for loan losses                                (14,324)        (11,800)
                                                            ------------  --------------
      Loans, net                                                934,421         859,640

Premises and equipment, net                                      34,061          32,612
Accrued interest receivable                                       6,462           7,416
Bank-owned life insurance                                        17,019          16,660
Restricted equity securities                                      6,401           5,060
Other assets                                                     11,132           8,367
                                                            ------------  --------------

                                                            $ 1,313,984   $   1,212,980
                                                            ============  ==============

               Liabilities and Stockholders' Equity

Deposits
  Noninterest-bearing                                       $   115,804   $     101,272
  Interest-bearing:
    NOW accounts                                                156,811         132,186
    Savings                                                     288,859         289,731
    Money management accounts                                    75,518          73,609
    Time deposits over $100,000                                 287,902         243,501
    Other time deposits                                         125,479         111,867
                                                            ------------  --------------
                                                              1,050,373         952,166

Federal funds purchased and securities sold
  under repurchase agreements                                    61,425          81,166
Advances from Federal Home Loan Bank                             81,000          59,000
Other borrowed funds                                                400             500
Accrued interest payable and other liabilities                    9,790          10,390
Subordinated debentures                                          20,000          20,000
                                                            ------------  --------------

      Total liabilities                                       1,222,988       1,123,222
                                                            ------------  --------------

Stockholders' equity:
  Common stock, $3.00 par value; 10,000,000 shares
    authorized; 5,976,811 and 5,976,811 shares issued in
    2008 and 2007, respectively; 5,967,414 and 5,967,536
    shares outstanding in 2008 and 2007, respectively            17,930          16,301
  Additional paid-in capital                                     55,088          39,518
  Retained earnings                                              20,475          34,228
  Treasury stock, at cost; 9,397 and 9,275 shares in
    2008 and 2007, respectively                                    (278)           (317)
  Accumulated other comprehensive (loss) income, net             (2,219)             28
                                                            ------------  --------------

      Total stockholders' equity                                 90,996          89,758
                                                            ------------  --------------

                                                            $ 1,313,984   $    1,212,980
                                                            ===========   ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                        3
<PAGE>
            SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

                       Consolidated Statements of Income
                 (Dollars in thousands, except per share data)

                                  (Unaudited)
<TABLE>
<CAPTION>
                                                 Three Months Ended        Six Months Ended
                                                       June 30,                June 30,
                                                ----------------------  ---------------------
                                                   2008        2007        2008        2007
                                                ----------  ----------  ----------  ---------
<S>                                             <C>         <C>         <C>         <C>
Interest income:
  Loans, including fees                         $   15,087  $  16,399  $   31,480  $   31,903
  Investment securities                              3,337      2,921       6,598       5,533
  Federal funds sold                                    96        316         187         682
  Interest-bearing deposits in other banks               6          7          12          13
                                                ----------  ---------  ----------  ----------
      Total interest income                         18,526     19,643      38,277      38,131
                                                ----------  ---------  ----------  ----------

Interest expense:
  Deposits                                           7,166      8,165      15,042      15,657
  Federal funds purchased and securities sold
    under repurchase agreements                        324        803         864       1,670
  Other borrowings                                     993      1,189       2,063       2,264
                                                ----------  ---------  -----------  ---------
      Total interest expense                         8,483     10,157      17,969      19,591
                                                ----------  ---------  -----------  ---------

      Net interest income                           10,043      9,486      20,308      18,540

Provision for loan losses                            1,652      1,030       2,923       1,606
                                                ----------  ---------  -----------  ---------

      Net interest income after provision
        for loan losses                              8,391      8,456      17,385      16,934
                                                ----------  ---------  -----------  ---------

Noninterest income:
  Service charges and fees on deposits               1,820      1,582       3,491       2,978
  Gain on sales of loans                             1,576      1,320       2,836       2,605
  Investment securities gains, net                      30          -          68          33
  Gain (loss) on sale of fixed assets                    5        (11)          8         (63)
  Retail investment income                             276        275         564         598
  Trust service fees                                   299        285         584         558
  Increase in cash surrender value of
    bank-owned life insurance                          194        161         358         326
  Miscellaneous income                                 252        161         473         329
                                                ----------  ---------  -----------  ---------
      Total noninterest income                       4,452      3,773       8,382       7,364
                                                ----------  ---------  -----------  ---------

Noninterest expense:
  Salaries and other personnel expense               5,383      4,628      10,554       9,424
  Occupancy expenses                                 1,005        743       2,030       1,503
  Other operating expenses                           2,877      2,212       5,601       4,427
                                                ----------  ---------  -----------  ---------
      Total noninterest expense                      9,265      7,583      18,185      15,354
                                                ----------  ---------  -----------  ---------

      Income before income taxes                     3,578      4,646       7,582       8,944

Income tax expense                                   1,170      1,675       2,539       3,214
                                                ----------  ---------  ----------  ----------

      Net income                                $    2,408  $   2,971   $   5,043  $    5,730
                                                ==========  =========  ==========  ==========

Basic net income per share                      $     0.40  $    0.50   $    0.85  $     0.96
                                                ==========  =========  ==========  ==========

Diluted net income per share                    $     0.40  $    0.49   $    0.84  $     0.95
                                                ==========  =========  ==========  ==========

Weighted average common shares outstanding       5,965,978  5,975,559   5,962,471   5,976,195
                                                ==========  =========  ==========  ==========

Weighted average number of common and
  common equivalent shares outstanding           6,020,119  6,049,907   6,021,581   6,051,869
                                                ==========  =========  ==========  ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                        4
<PAGE>
            SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows
                             (Dollars in thousands)

                                  (Unaudited)
<TABLE>
<CAPTION>
                                                             Six Months Ended June 30,
                                                                 2008        2007
                                                              ----------  ----------
<S>                                                           <C>         <C>
Cash flows from operating activities:
Net income                                                    $    5,043   $   5,730
  Adjustments to reconcile net income to net cash
   provided by operating activities
    Depreciation                                                   1,094         730
    Deferred income tax benefit                                   (1,003)          -
    Provision for loan losses                                      2,923       1,606
    Net investment securities gains                                  (68)        (33)
    Net accretion of discount on investment securities               (88)       (111)
    Increase in CSV of bank owned life insurance                    (358)       (326)
    Stock options compensation cost                                  102         268
    (Gain) loss on disposal of premises and equipment                 (8)         63
    Loss on the sale of other real estate                              4           -
    Gain on sales of loans                                        (2,836)     (2,605)
    Real estate loans originated for sale                       (135,588)   (133,166)
    Proceeds from sales of real estate loans                     130,355     138,739
    Decrease (Increase) in accrued interest receivable               955        (679)
    Increase in other assets                                        (363)       (355)
    Decrease in accrued interest payable and other liabilities      (600)     (1,713)
                                                              ----------  ----------
      Net cash (used) provided by operating activities              (436)      8,148
                                                              ----------  ----------

Cash flows from investing activities:
    Proceeds from sales of available for sale securities          15,121           -
    Proceeds from maturities of available for sale securities     50,234      30,270
    Proceeds from maturities of held to maturity securities          765       1,045
    Purchase of available for sale securities                    (73,666)    (56,713)
    Purchase of restricted equity securities                      (1,341)       (168)
    Proceeds from redemption of FHLB stock                             -         225
    Net increase in loans                                        (78,117)    (63,185)
    Additions to premises and equipment                           (3,989)     (3,166)
    Proceeds from sale of other real estate                          408          48
    Proceeds from sale of premises and equipment                   1,454           8
                                                              ----------  ----------
      Net cash used in investing activities                      (89,131)    (91,636)
                                                              ----------  ----------

Cash flows from financing activities:
    Net increase in deposits                                      98,206      96,348
    Net decrease in federal funds purchased and
      securities sold under repurchase agreements                (19,741)       (438)
    Advances from Federal Home Loan Bank                          22,000           -
    Payments of Federal Home Loan Bank advances                        -      (5,000)
    Principal payments on other borrowed funds                      (100)          -
    Purchase of treasury stock                                      (437)        (71)
    Payment of cash dividends                                     (1,409)     (1,413)
    Proceeds from stock options exercised                            179           -
    Proceeds from Directors' stock purchase plan                      13           -
    Cash paid for fractional shares                                   (5)          -
                                                              ----------  ----------
      Net cash provided by financing activities                   98,706      89,426
                                                              ----------  ----------

      Net increase in cash and cash equivalents               $    9,139   $   5,938

Cash and cash equivalents at beginning of period                  25,058      40,911

                                                              ----------  ----------
Cash and cash equivalents at end of period                    $   34,197   $  46,849
                                                              ==========  ==========

Supplemental disclosures of cash paid during the period for:
  Interest                                                    $   18,635   $  19,931
                                                              ==========  ==========

  Income taxes                                                $    3,640   $   2,492
                                                              ==========  ==========

Supplemental information on noncash investing activities:
    Loans transferred to other real estate                    $      412   $     341
                                                              ==========  ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                        5
<PAGE>
            SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                 June 30, 2008

Note  1  -  Basis  of  Presentation

The  accompanying  consolidated  financial  statements  include  the accounts of
Southeastern  Bank  Financial  Corporation (the "Company"), and its wholly-owned
subsidiaries,  Georgia  Bank  &  Trust  Company (the "Bank") and Southern Bank &
Trust  (the  "Thrift").  Significant  intercompany transactions and accounts are
eliminated  in  consolidation.  Dollar  amounts  are rounded to thousands except
share  and  per  share  data.

The  financial  statements  for the three and six months ended June 30, 2008 and
2007  are unaudited and have been prepared pursuant to the rules and regulations
of  the  Securities  and  Exchange Commission.  Certain information and footnote
disclosures  normally  included  in  financial statements prepared in accordance
with  accounting  principles  generally accepted in the United States of America
have  been  condensed  or omitted pursuant to such rules and regulations.  These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes included in the Company's annual
report  on  Form  10-K  for  the  year  ended  December  31,  2007.

In  the  opinion  of management, all adjustments necessary to present fairly the
financial  position and the results of operations and cash flows for the interim
periods  have been made.  All such adjustments are of a normal recurring nature.
The  results  of operations for the three and six months ended June 30, 2008 are
not  necessarily  indicative  of the results of operations which the Company may
achieve  for  the  entire  year.

Some items in the prior period financial statements were reclassified to conform
to  the  current  presentation.

Note  2  -  Fair  Value  Measurements

 The  Company  adopted  Statement of Financial Accounting Standards ("SFAS") No.
157,  "Fair  Value  Measurements" at the beginning of our 2008 fiscal year. SFAS
No.  157  defines  fair  value, establishes a framework for measuring fair value
under  GAAP,  and expands disclosures about fair value measurement. According to
SFAS  No. 157, fair value is defined as the price that would be received to sell
an  asset  or  paid  to  transfer  a liability in an orderly transaction between
market  participants at the measurement date. SFAS No. 157 applies to all assets
and  liabilities  that  are  being  measured and reported on a fair value basis.
This  statement  enables  the  reader  of the financial statements to assess the
inputs  used  to  develop  those  measurements  by  establishing a hierarchy for
ranking  the  quality  and reliability of the information used to determine fair
values.  This  statement


                                        6
<PAGE>
requires  that  assets  and liabilities carried at fair value will be classified
and  disclosed  in  one  of  the  following  three  categories:

Level 1:        Quoted prices in active markets for identical assets or
liabilities.

Level  2:       Significant  other observable inputs other than level 1 prices,
such as quoted market prices for similar assets or liabilities, quoted prices in
markets  that  are  not  active,  and other inputs that are observable or can be
corroborated  by  observable  market  data.  Observable  market  based inputs or
unobservable  inputs  that  are  corroborated  by  market  data.

Level 3:        Unobservable inputs that are not corroborated by market data.

In determining the appropriate levels, the Company used the following methods
and significant assumptions to estimate the fair value of items:

Securities: The fair values of trading securities, held-to-maturity securities
-----------
and securities available for sale are determined by obtaining quoted prices on
nationally recognized securities exchanges (Level 1 inputs) or matrix pricing,
which is a mathematical technique widely used in the industry to value debt
securities without relying exclusively on quoted prices for the specific
securities, but rather by relying on the securities' relationship to other
benchmark quoted securities (Level 2 inputs).

Impaired Loans: The fair value of impaired loans is determined by reviewing the
---------------
estimated amount realizable from collateral liquidation based upon an appraisal
as well as the estimated amounts realizable from borrowers and guarantors (Level
3 inputs).

Investments in tax credits: The fair values for tax credits are measured on a
---------------------------
recurring basis and are based upon total credits and deductions remaining to be
allocated and total estimated credits and deductions to be allocated.(Level 3
inputs)


                                        7
<PAGE>
Assets and Liabilities Measured on a Recurring Basis
----------------------------------------------------
The table below presents the balances of assets and liabilities measured at fair
value on a recurring basis by level within the hierarchy:

<TABLE>
<CAPTION>
                                                  Quoted
                                                Prices in
                                                  Active
                                                 Markets      Significant
                                                   for          Other         Significant
                                                Identical     Observable      Unobservable
                                   June 30,       Assets        Inputs          Inputs
                                     2008       (Level 1)      (Level 2)       (Level 3)
                                                 (Dollars in thousands)
                               ---------------------------------------------------------
<S>                            <C>            <C>          <C>            <C>
Available-for-sale securities  $      250,230  $      291   $    249,939   $           -

Tax credits                               553           0              0             553

Held-to-maturity securities               700           0            700               0

                               --------------  ----------   ------------   -------------
Total                          $      251,483  $      291   $    250,639   $         553
                               ==============  ==========  =============  ==============
</TABLE>

The table below presents a reconciliation and income statement classification of
gains  and  losses  for  all  assets measured at fair value on a recurring basis
using  significant  unobservable inputs (Level 3) for the quarter ended June 30,
2008:

         Fair Value Measurements Using Significant Unobservable Inputs
                                   (Level 3)
<TABLE>
<CAPTION>
<S>                                         <C>
                                            Tax Credits
                                            -------------
Beginning balance, Jan. 1, 2008             $        594

Total realized losses included in earnings           (41)
                                            -------------
Ending balance, June 30, 2008               $        553
                                            =============
</TABLE>


Assets  and  Liabilities  Measured  on  a  Non-Recurring  Basis
---------------------------------------------------------------

Assets  and  liabilities  measured  at  fair  value on a non-recurring basis are
summarized  below:

<TABLE>
<CAPTION>
                            Quoted
                          Prices in
                            Active
                           Markets    Significant
                             for         Other       Significant
                June 30,  Identical    Observable   Unobservable
                            Assets       Inputs        Inputs
                  2008    (Level 1)    (Level 2)      (Level 3)
                -------------------------------------------------
<S>             <C>       <C>         <C>           <C>
Assets:
Impaired loans    14,949                                  14,949
</TABLE>

The  following  represents  impairment  charges  recognized  during  the period:

Impaired  loans,  which  are  measured  for  impairment  using the fair value of
collateral  for  collateral-dependent  loans,  had a carrying amount of $14,949,
with  a  valuation  allowance  of  $3,000.


                                        8
<PAGE>
In  February 2008, the FASB issued Staff Position (FSP) 157-2, Effective Date of
FASB  Statement  No. 157.  This FSP delays the effective date of FAS 157 for all
nonfinancial  assets  and  nonfinancial  liabilities,  except  those  that  are
recognized  or  disclosed at fair value on a recurring basis (at least annually)
to  fiscal  years  beginning after November 15, 2008, and interim periods within
those  fiscal  years.  The  Company  has  not  fully  implemented  SFAS  157 for
nonfinancial  assets  and  liabilities.  Nonfinancial  assets  at  June 30, 2008
consist  of other real estate owned, the amount of which was not material to the
financial  statements.

Note  3  -  Comprehensive  Income

Other comprehensive income for the Company consists of changes in net unrealized
gains  and  losses  on  investment  securities  available  for  sale.  Total
comprehensive loss for the three months ended June 30, 2008 was $742 compared to
total  comprehensive  income  of  $647 for the three months ended June 30, 2007.
Total  comprehensive  income  for  the six months ended June 30, 2008 was $2,796
compared  to  $4,135  for  the  six  months  ended  June  30,  2007.

Note  4  -  Dividends  Declared

On  April  16, 2008, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  was  paid  on  May  14,  2008 to
shareholders  of  record  as  of  May  2,  2008.

On  April  23, 2008, the Company declared a 10% stock dividend which was paid on
June  2, 2008 to shareholders of record as of May 22, 2008. No fractional shares
were  issued.  Shareholders  entitled to fractional shares received cash for the
fractional  shares  at a price equal to the closing price of the stock as of the
record  date,  adjusted  for  the  stock  dividend. 542,343 additional shares of
common stock and 854 shares of treasury stock were issued in connection with the
stock  dividend.  The Company's earnings per share has been adjusted accordingly
for  all  periods  presented.

On  July  16,  2008, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  is payable on August 18, 2008 to
shareholders  of  record  as  of  August  5,  2008.

Note  5  -  Unrealized  Losses  on  Investment  Securities

Available  for  Sale  securities  are  carried at fair market value with related
unrealized gains or losses included in stockholders' equity as accumulated other
comprehensive  income.  Unrealized  losses  have not been recognized into income
because the issuers are either obligations of the U.S. government or are of high
credit  quality.  Also,  the  decline in fair value is largely due to changes in
interest  rates  and  the  fair  value is expected to recover as the obligations
approach  maturity.


                                        9
<PAGE>
Note  6  -  Recently  Issued  Accounting  Standards  on the Financial Statements

In  February  2007  the  FASB  issued Statement of Financial Accounting Standard
("SFAS")  No.  159,  "The  Fair  Value Option for Financial Assets and Financial
Liabilities."  SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value with an objective of improving
financial  reporting  by  providing  entities  with  the opportunity to mitigate
volatility  in  reported  earnings  caused  by  measuring  related  assets  and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  The  new  standard is effective for the Company on January 1, 2008.
The  Company  did  not  elect  the fair value option for any financial assets or
financial  liabilities  as  of  January  1,  2008.

On  January  1,  2008, the Company adopted FASB Emerging Issues Task Force Issue
No.  06-4,  Accounting  for  Deferred  Compensation  and Postretirement Benefits
Aspects  of  Endorsement  Split-Dollar  Life Insurance Arrangements.  This issue
requires  that  a  liability  be  recorded  during  the  service  period  when a
split-dollar  life  insurance agreement continues after participants' employment
or  retirement.  The  required  accrued  liability  will  be based on either the
post-employment  benefit  depending  on  the contractual terms of the underlying
agreement.  This  issue  is  effective for fiscal years beginning after December
15, 2007.  The impact of adoption was not material to the Company's consolidated
financial  statements.


                                       10
<PAGE>
Item  2. Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations

(Dollar amounts are expressed in thousands unless otherwise noted)

Overview
--------

Southeastern  Bank  Financial  Corporation  (the  "Company")  operates  two
wholly-owned  subsidiaries  in  the  Augusta-Richmond County, GA-SC metropolitan
area.  Georgia  Bank  &  Trust  Company (the "Bank") was organized by a group of
local  citizens  and  commenced  business  on  August  28, 1989, with one branch
location.  Today,  it  is  Augusta's largest community banking company operating
nine  full  service  branches  in  Augusta, Martinez, and Evans, Georgia and one
branch in Athens, Georgia.  Mortgage origination offices are located in Augusta,
Savannah  and  Athens,  Georgia.  SB&T  Capital  Corporation  (the  "LPO")  a
wholly-owned subsidiary of the Bank, was organized on August 16, 2007 and opened
an  office  in Greenville, South Carolina.  On November 1, 2007 the Bank entered
into  an  Operating  Agreement with NMF Asset Management LLC ("NMF") whereby the
Bank  became  a 30% partner.  NMF is an investment management firm that provides
services  to  individuals,  trusts, pensions, nonprofit organizations as well as
other  institutions.  Southern Bank & Trust (the "Thrift), a federally chartered
thrift,  operates  three full service branches in North Augusta and Aiken, South
Carolina.  Effective  first  quarter  2008 the Thrift began originating mortgage
loans  to  be  sold  in the secondary market. The Company's operations campus is
located  in  Martinez,  Georgia  and  services  both  subsidiaries.

The  Company's primary market includes Richmond and Columbia Counties in Georgia
and  Aiken  County  in  South Carolina, all part of the Augusta-Richmond County,
GA-SC  metropolitan  statistical  area  (MSA).  The  2006  population  of  the
Augusta-Richmond  County,  GA-SC  MSA was 523,249, the second largest in Georgia
and fourth largest in South Carolina.  The Augusta market area has a diversified
economy  based  principally  on  government,  public  utilities,  health  care,
manufacturing,  construction, and wholesale and retail trade.  Augusta is one of
the  leading medical centers in the Southeast.   The Company entered the Athens,
GA  market  in December 2005.  The 2006 population for the Athens-Clarke County,
GA  MSA  was  185,479,  ranked sixth in the state of Georgia.  The Athens market
area  has  a diversified economy based primarily on government, retail services,
tourism,  manufacturing, other services, and health care, with the largest share
of  government  jobs  in  the  state.  In  August  2007  the Company entered the
Greenville,  SC  market.  The 2006 population for the Greenville-Mauldin-Easley,
SC MSA was 601,986, ranked third in the state of South Carolina.  The Greenville
market  area  has  a  diversified  economy  based  primarily  on  government,
manufacturing,  construction,  retail  services,  and  health  care.

The  Company's  services  include  the origination of residential and commercial
real  estate  loans,  construction  and  development  loans,  and commercial and
consumer  loans.  The  Company  also  offers  a  variety  of  deposit  programs,
including  noninterest-bearing  demand,  interest  checking,  money  management,
savings,  and  time  deposits.  In  the


                                       11
<PAGE>
Augusta-Richmond  County,  GA-SC  metropolitan  area,  GB&T  had  12.87%  of all
deposits  and was the second largest depository institution at June 30, 2007, as
cited from the Federal Deposit Insurance Corporation's website.  Securities sold
under  repurchase  agreements  are  also  offered.  Additional  services include
wealth  management,  trust,  retail  investment,  and  mortgage.  As a matter of
practice,  most  mortgage  loans are sold in the secondary market; however, some
mortgage  loans  are placed in the portfolio based on asset/liability management
strategies.  The Company continues to concentrate on increasing its market share
through  various  new deposit and loan products and other financial services, by
adding  locations,  and  by  focusing  on  the  customer relationship management
philosophy.  The  Company  is committed to building life-long relationships with
its  customers,  employees,  shareholders,  and  the  communities  it  serves.

The  Company's  primary source of income is from its lending activities followed
by  interest  income from its investment activities, service charges and fees on
deposits, and gain on sales of mortgage loans in the secondary market.  Interest
income on loans decreased during the first six months of 2008 as compared to the
first six months of 2007 due to lower interest rates offset in part by increased
levels of loans outstanding.  Interest income on investment securities increased
due  to  higher  interest rates.  Service charges and fees on deposits increased
due  to increases in NSF income on both retail and business checking accounts as
a result of new account growth.  The introduction of risk based pricing required
by  Fannie  Mae and Freddie Mac which has resulted in higher coupon rates caused
the  increased  gain  on  sale  of  loans during the first six months of 2008 as
compared  to  the  first  six  months  of  2007.

<TABLE>
<CAPTION>
                            Table 1 - Selected Financial Data

                                    June 30,     December 31,    December 31,
                                      2008           2007            2003
                                   -----------  --------------  --------------
                                             (Dollars in thousands)
<S>                                <C>          <C>             <C>
Assets                             $1,313,984   $   1,212,980   $     630,633
Loans                                 968,117         882,743         432,679
Deposits                            1,050,373         952,166         483,952

Return on average total assets           0.80%           1.04%           1.31%
Return on average equity                11.53%          14.03%          15.62%
</TABLE>

The Company continues to experience steady growth as evidenced in Table 1 above.
The  Company  has  also achieved significant increases in loans and deposits and
continues  to  provide strong returns on assets and equity as noted in the table
above.  Net  income  for  the  year  ended 2003 was $7.9 million compared to net
income  of  $11.8 million at year end 2007.  Net income for the six months ended
June  30,  2008  was $5.0 million.  The Company has paid cash dividends of $0.13
per  share  paid  each  quarter  since  2004.

The  Company  meets  its  liquidity  needs  by managing cash and due from banks,
federal  funds  purchased and sold, maturity of investment securities, principal
repayments  from


                                       12
<PAGE>
mortgage-backed  securities,  and  draws  on  lines  of  credit.  Additionally,
liquidity  can  be managed through structuring deposit and loan maturities.  The
Company  funds  loan  and  investment growth with core deposits, securities sold
under repurchase agreements, Federal Home Loan Bank advances and other wholesale
funding  including  brokered  certificates  of  deposit.  During  inflationary
periods,  interest  rates  generally  increase  and operating expenses generally
rise.  When  interest  rates  rise,  variable rate loans and investments produce
higher  earnings;  however,  deposit  and other borrowings interest expense also
rise.  The  Company  monitors its interest rate risk as it applies to net income
in  a ramp up and down annually 200 basis points (2%) scenario and as it applies
to  economic  value  of  equity  in  a  shock  up and down 200 (2%) basis points
scenario.  The Company monitors operating expenses through responsibility center
budgeting.

Forward-Looking  Statements
---------------------------

Southeastern  Bank Financial Corporation may, from time to time, make written or
oral forward-looking statements, including statements contained in the Company's
filings  with  the Securities and Exchange Commission (the "Commission") and its
reports  to  shareholders.  Statements  made in such documents, other than those
concerning  historical  information,  should  be  considered forward-looking and
subject to various risks and uncertainties.  Such forward-looking statements are
made  based  upon  management's  belief  as  well  as  assumptions  made by, and
information  currently  available  to,  management  pursuant  to  "safe  harbor"
provisions  of  the  Private  Securities  Litigation  Reform  Act  of 1995.  The
Company's  actual  results may differ materially from the results anticipated in
forward-looking  statements due to a variety of factors, including unanticipated
changes  in  the  Company's  local economies, the national economy, governmental
monetary  and  fiscal  policies,  deposit  levels,  loan demand, loan collateral
values  and  securities  portfolio  values;  difficulties  in interest rate risk
management;  the effects of competition in the banking business; difficulties in
expanding  the  Company's  business  into  new  markets; changes in governmental
regulation  relating  to the banking industry, including regulations relating to
branching  and acquisitions; failure of assumptions underlying the establishment
of  reserves  for  loan  losses,  including  the  value of collateral underlying
delinquent loans; and other factors.  The Company cautions that such factors are
not  exclusive.  The  Company  does  not undertake to update any forward-looking
statement  that  may be made from time to time by, or on behalf of, the Company.

Critical  Accounting  Estimates
-------------------------------

The  accounting  and  financial  reporting  policies  of  the  Company  and  its
subsidiaries  conform  to accounting principles generally accepted in the United
States  of  America  and  to  general practices within the banking industry.  Of
these  policies,  management  has  identified the allowance for loan losses as a
critical accounting estimate that requires difficult, subjective judgment and is
important  to  the  presentation  of  the  financial  condition  and  results of
operations  of  the  Company.

The allowance for loan losses is established through a provision for loan losses
charged  to  expense,  which affects the Company's earnings directly.  Loans are
charged  against the allowance for loan losses when management believes that the
collectibility  of  the


                                       13
<PAGE>
principal  is  unlikely.  Subsequent recoveries are added to the allowance.  The
allowance  is  an  amount  that  reflects  management's estimate of the level of
inherent  losses  in  the  portfolio.  Factors  considered  by  management  in
determining  the  adequacy of the allowance include, but are not limited to: (1)
detailed  reviews of individual loans; (2) historical and current trends in loan
charge-offs  for  the various portfolio segments evaluated; (3) the level of the
allowance  in  relation to total loans and to historical loss levels; (4) levels
and  trends  in  non-performing  and  past  due  loans; (5) collateral values of
properties  securing  loans; (6) management's assessment of economic conditions.
The  Company's  Board  of  Directors  reviews  the recommendations of management
regarding  the  appropriate  level  for the allowance for loan losses based upon
these  factors.

The  provision  for loan losses is the charge to operating earnings necessary to
maintain  an  adequate  allowance  for  loan  losses.  The Company has developed
policies and procedures for evaluating the overall quality of its loan portfolio
and  the  timely  identification  of  problem  credits.  Management continues to
review  these  policies and procedures and makes further improvements as needed.
The adequacy of the Company's allowance for loan losses and the effectiveness of
the Company's internal policies and procedures are also reviewed periodically by
the  Company's regulators and the Company's internal loan review personnel.  The
Company's  regulators  may  advise  the  Company  to  recognize additions to the
allowance  based upon their judgments about information available to them at the
time  of  their  examination.  Such  regulatory  guidance is considered, and the
Company  may  recognize  additions  to  the  allowance  as  a  result.

The  Company  continues  to  refine  the  methodology  on which the level of the
allowance for loan losses is based, by comparing historical loss ratios utilized
to actual experience and by classifying loans for analysis based on similar risk
characteristics.  Cash  receipts for accruing loans are applied to principal and
interest  under  the  contractual  terms  of  the  loan agreement; however, cash
receipts  on impaired and nonaccrual loans for which the accrual of interest has
been  discontinued  are  applied to principal and interest income depending upon
the  overall  risk  of  principal  loss  to  the  Company.

Performance Overview -- Net Income
----------------------------------

The  Company's net income for the second quarter of 2008 was $2,408, which was a
decrease of $563 (18.9%) compared to net income of $2,971 for the second quarter
of  2007.  Diluted net income per share for the three months ended June 30, 2008
was  $0.40  compared  to  $0.49  for  the three months ended June 30, 2007.  Net
income  for  the first six months of 2008 was $5,043, a decrease of $687 (12.0%)
compared  with  net  income  of  $5,730  for  the first six months of 2007.  The
decrease  in  net  income  for  the  three and six months ended June 30, 2008 as
compared  with  the  three  and  six months ended June 30, 2007, was primarily a
result  of increases in the provision for loan losses due to increased levels of
nonperforming  assets.  Interest income on loans decreased due to lower interest
rates  somewhat  offset  by  increased  volumes.  Interest  income on investment
securities  increased  due  to  increased  volumes  and  higher  interest rates.
Interest  expense  on  deposits, securities sold under repurchase agreements and
other  borrowings  decreased  as  a  result  of  lower  interest  rates.


                                       14
<PAGE>
Factors  contributing  to  the increase in noninterest income for the six months
ended June 30, 2008, were primarily due to increases in service charges and fees
on  deposits  due  to  NSF  income on retail and business checking accounts as a
result  of  new  account growth.  Noninterest expense increased during the three
and  six  months ended June 30, 2008 compared to the same periods ended June 30,
2007,  due  to  increases  in salaries, employee benefits, occupancy expense and
other  operating  expenses.  Significant  changes  in  other  operating expenses
during  the  three  and  six  month  periods  include  increases  in processing,
marketing,  communications,  professional  fees,  and insurance and tax expense.

<TABLE>
<CAPTION>
                                    Table 2 - Selected Balance Sheet Data


                                                                                     Variance
                                               June 30,         December 31,   ---------------------
                                                 2008              2007           Amount         %
                                             -------------    -------------    ----------    -------
                                                                (Dollars in thousands)
<S>                                          <C>              <C>              <C>           <C>
Cash and due from banks                      $      30,797    $      24,558    $   6,239       25.4%
Federal funds sold                                   2,900                -        2,900         N/A
Investment securities                              250,919          246,864        4,055        1.6%
Loans                                              968,117          882,743       85,374        9.7%
Assets                                           1,313,984        1,212,980      101,004        8.3%
Deposits                                         1,050,373          952,166       98,207       10.3%
Securities sold under repurchase agreements         61,425           81,166      (19,741)    (24.3%)
Advances from Federal Home Loan Bank                81,000           59,000       22,000       37.3%
Liabilities                                      1,222,988        1,123,222       99,766        8.9%
Stockholders' equity                                90,996           89,758        1,238        1.4%
</TABLE>

Table  2 highlights significant changes in the balance sheet at June 30, 2008 as
compared  to December 31, 2007.  Assets increased $101,004, primarily the result
of  higher  balances for loans and investment securities as well as increases in
cash  and  due  from  banks.  These  increases were funded by increases in total
deposits  of  $98,207  along  with increases in Federal Home Loan Bank advances,
somewhat  offset  by  decreases  in securities sold under repurchase agreements.
Net  income of $5,043 less cash dividends paid of $1,409 also contributed to the
funding.

The  annualized  return  on average assets for the Company was 0.80% for the six
months  ended  June  30,  2008, compared to 1.06% for the same period last year.
While total assets have increased $180,666 since second quarter 2007, net income
has  decreased  $563  resulting  in  a  decrease  in  ROA.

The  annualized  return  on  average stockholders' equity was 11.53% for the six
months  ended  June  30, 2008, compared to 14.19% for the same period last year.
The  decrease  is  primarily  attributable  to  the  decrease  in net income and
increases  in  accumulated  other  comprehensive  income.


                                       15
<PAGE>
Net  Interest  Income
---------------------

The  primary source of earnings for the Company is net interest income, which is
the  difference  between  income  on  interest-earning assets, such as loans and
investment securities, and interest expense incurred on interest-bearing sources
of  funds,  such  as  deposits  and  borrowings.  The  following table shows the
average  balances  of  interest-earning assets and interest-bearing liabilities,
annualized  average  yields  earned and rates paid on those respective balances,
and  the  actual interest income and interest expense for the periods indicated.
Average  balances  are calculated based on daily balances, yields on non-taxable
investments  are not reported on a tax equivalent basis and average balances for
loans  include  nonaccrual  loans  even  though  interest  was  not  earned.

<TABLE>
<CAPTION>
                             Table 3 - Average Balances, Income and Expenses, Yields and Rates


                                               Three Months Ended June 30, 2008           Three Months Ended June 30, 2007
                                               --------------------------------           --------------------------------
                                                           Annualized                               Annualized
                                                            Average        Amount                    Average       Amount
                                              Average       Yield or       Paid or     Average       Yield or      Paid or
                                               Amount         Rate         Earned       Amount         Rate        Earned
                                             ---------------------------------------  -------------------------------------
                                                                         (Dollars in thousands)
<S>                                          <C>         <C>             <C>          <C>         <C>             <C>
Interest-earning assets:
  Loans                                      $  946,386           6.33%  $    15,087  $  792,449           8.22%  $  16,399
  Investment securities                         251,467           5.31%        3,337     227,454           5.14%      2,921
  Federal funds sold                             19,628           1.96%           96      23,177           5.46%        316
  Interest-bearing deposits in other
    banks                                           500           4.60%            6         511           5.48%          7
                                             ----------                  -----------  ----------                  ---------
      Total interest-earning assets          $1,217,981           6.05%  $    18,526  $1,043,591           7.48%  $  19,643
                                             ----------                  -----------  ----------                  ---------

Interest-bearing liabilities:
  Deposits                                   $  918,522           3.13%  $     7,166  $  769,266           4.26%  $   8,165
  Federal funds purchased / securities
    sold under repurchase agreements             62,589           2.08%          324      61,431           5.24%        803
  Other borrowings                              100,145           3.98%          993      78,479           6.08%      1,189
                                             ----------                  -----------  ----------                  ---------
      Total interest-bearing liabilities     $1,081,256           3.15%  $     8,483  $  909,176           4.48%  $  10,157
                                             ----------                  -----------  ----------                  ---------

Net interest margin/income:                                       3.25%  $    10,043                       3.58%  $   9,486
                                                                         ===========                              =========
</TABLE>


                                       16
<PAGE>
<TABLE>
<CAPTION>
                             Table 4 - Average Balances, Income and Expenses, Yields and Rates

                                               Six Months Ended June 30, 2008             Six Months Ended June 30, 2007
                                               ------------------------------             ------------------------------
                                                           Annualized                               Annualized
                                                            Average        Amount                    Average       Amount
                                              Average       Yield or       Paid or     Average       Yield or      Paid or
                                               Amount         Rate         Earned       Amount         Rate        Earned
                                             ---------------------------------------  -------------------------------------
                                                                         (Dollars in thousands)
<S>                                          <C>         <C>             <C>          <C>         <C>             <C>
Interest-earning assets:
  Loans                                      $  921,443           6.78%  $    31,480  $  776,823           8.20%  $  31,903
  Investment securities                         250,042           5.28%        6,598     216,130           5.12%      5,533
  Federal funds sold                             17,303           2.16%          187      26,138           5.26%        682
  Interest-bearing deposits in other
    banks                                           500           4.60%           12         512           5.27%         13
                                             ----------                  -----------  ----------                  ---------
      Total interest-earning assets          $1,189,288           6.40%  $    38,277  $1,019,603           7.47%  $  38,131
                                             ----------                  -----------  ----------                  ---------

Interest-bearing liabilities:
  Deposits                                   $  896,472           3.37%  $    15,042  $  744,111           4.24%  $  15,657
  Federal funds purchased / securities
    sold under repurchase agreements             63,447           2.73%          864      64,046           5.26%      1,670
  Other borrowings                               93,328           4.43%        2,063      79,531           5.74%      2,264
                                             ----------                  -----------  ----------                  ---------
      Total interest-bearing liabilities     $1,053,247           3.42%  $    17,969  $  887,688           4.45%  $  19,591
                                             ----------                  -----------  ----------                  ---------

Net interest margin/income:                                       3.37%  $    20,308                       3.59%  $  18,540
                                                                         ===========                              =========
</TABLE>


Net  interest  income  increased  $556  (5.9%) during the three-month period and
$1,768  (9.5%)  during  the  six-month  period as compared to the same period in
2007.  Loan interest income decreased $1,312 and $423 in the three and six month
periods, respectively, while deposit interest expense decreased $999 and $615 in
the  three  and  six  month  periods, respectively, all the result of decreasing
interest  rates offset in part by the continued growth of account balances.  The
annual  average  balance  for  loans  was  $921,443  at  June  30,  2008 with an
annualized  average yield of 6.78% compared to $776,823 at June 30, 2007 with an
annualized  average  yield  of  8.20%.  Interest-bearing  deposits had an annual
average balance of $896,472 with an annualized average rate of 3.37% at June 30,
2008  compared  to  $744,111  and  4.24%  at  June 30, 2007.  Other contributing
factors  during  both  the  three  and  six  month periods included increases in
interest income on investment securities, decreases in interest expense on other
borrowings,  securities  sold  under  repurchase  agreements  and  subordinated
debentures,  all  the  result  of  lower  interest  rates.

The  Company's  net  interest margin for the three and six months ended June 30,
2008  was  3.25%  and  3.37% respectively as compared to 3.58% and 3.59% for the
three and six months ended June 30, 2007.  The rate for earning assets decreased
143  basis  points  and  107  basis  points for the three and six month periods,
respectively,  with  lower  average  yields  on  loans  and  federal  funds sold
accounting  for most of the decrease.  The cost to fund earning assets decreased
133  basis  points  and  103  basis  points for the three and six month periods,
respectively, primarily due to lower rates on deposits and securities sold under
repurchase  agreements.


                                       17
<PAGE>
Noninterest  Income
-------------------

<TABLE>
<CAPTION>
                                              Table 5 - Noninterest Income

                                Three Months Ended                              Six Months Ended
                                     June 30,               Variance               June 30,               Variance
                              -----------------------  -------------------  ----------------------  --------------------
                                   2008        2007     Amount       %          2008        2007      Amount       %
                              --------------  -------  ---------  --------  -------------  -------  ----------  --------
                                           (Dollars in thousands)                        (Dollars in thousands)

<S>                           <C>             <C>      <C>        <C>       <C>            <C>      <C>         <C>
Service charges and fees
  on deposits                 $        1,820  $1,581   $     239     15.1%  $       3,491  $2,978   $     513      17.2%
Gain on sales of loans                 1,576   1,320         256     19.4%          2,836   2,605         231       8.9%
Investment securities
  (losses) gains, net                     30       -          30       N/A             68      33          35     104.2%
Gain on sale of fixed assets               5     (11)         16  (144.6%)              8     (63)         71   (112.2%)
Retail investment income                 276     275           1      0.2%            564     598         (34)    (5.7%)
Trust services fees                      299     285          14      4.9%            584     558          26       4.7%
Increase in cash surrender
  value of bank-owned
  life insurance                         194     161          33     20.6%            358     326          32       9.9%
Miscellaneous income                     252     162          90     55.7%            473     329         144      43.7%
                              --------------  -------  ---------  --------  -------------  -------  ----------  --------
Total noninterest income      $        4,452  $3,773   $     679     18.0%  $       8,382  $7,364   $   1,018      13.8%
                              ==============  =======  =========  ========  =============  =======  ==========  ========
</TABLE>

Noninterest  income  increased  $679  (18.0%)  during the three-month period and
increased  $1,018  (13.8%)  during  the  six-month period.  The most significant
changes  for  the  three and six month periods were increases in service charges
and  fees  on  deposits  and gain on sale of loans.  Service charges and fees on
deposits  increased  primarily due to increases in NSF income on both retail and
business  checking  accounts  as  a result of new account growth.  The increased
gain  on sale of loans is due to the introduction of risk based pricing required
by  Fannie  Mae  and  Freddie  Mac  which  has  resulted in higher coupon rates.

Noninterest  Expense
--------------------

<TABLE>
<CAPTION>
                                       Table 6 - Noninterest Expense

                                Three Months Ended                      Six Months Ended
                                     June 30,           Variance             June 30,           Variance
                           ----------------------  ----------------  ---------------------  ----------------
                                2008        2007     Amount     %       2008        2007      Amount     %
                           --------------  ------  ---------  -----  -----------   -------  ---------  -----
                                       (Dollars in thousands)                 (Dollars in thousands)
<S>                        <C>             <C>     <C>        <C>    <C>           <C>      <C>        <C>
Salaries and other
  personnel expense        $        5,383  $4,628  $     755  16.3%  $     10,554  $ 9,424  $   1,130  12.0%
Occupancy expenses                  1,005     743        262  35.3%         2,030    1,503        527  35.1%
Other operating expenses            2,877   2,212        665  30.1%         5,601    4,427      1,174  26.5%
                           --------------  ------  ---------  -----  ------------  -------  ---------  -----
Total noninterest expense  $        9,265  $7,583  $   1,682  22.2%  $     18,185  $15,354  $   2,831  18.4%
                           ==============  ======  =========  =====  ============  =======  =========  =====
</TABLE>


                                       18
<PAGE>
Noninterest  expense  increased $1,682 (22.2%) during the three-month period and
$2,831  (18.4%)  during  the  six-month  period.

Salaries  and  other  personnel  expenses:

Salaries  and  other  personnel  expense  increased  $755  (16.3%)  during  the
three-month period and $1,130 (12.0%) during the six-month period as compared to
the  same  period in 2007.  This increase is primarily due to the opening of new
full  service  branches in North Augusta and Aiken, South Carolina and in Evans,
Georgia as well as the addition of a loan production office in Greenville, South
Carolina.  The  Company's  continued  growth  and  expansion has resulted in the
addition  of  new personnel, resulting in increased salaries, somewhat offset by
increases  in  contra  salary  expense  in  compliance  with  SFAS  No.  91.

Occupancy  expenses:

Increases  in  occupancy  expenses  during  the three and six month periods were
primarily  due  to  rent and lease expense for the North Augusta and Greenville,
South  Carolina  offices.  Additionally,  miscellaneous  equipment purchases and
depreciation  expense  increased as a result of opening new branches and the new
Operations  Campus  in  the  last  quarter  of  2007.

Other  operating  expenses:

Other  operating  expenses increased $665 (30.1%) for the three-month period and
$1,174  (26.5%)  for  the  six-month  period.  Increases  in processing expenses
during  both  the  three and six month periods were attributable to increases in
retail  checking  account  expense, ATM  processing and payroll processing fees.
Marketing  expenses  increased  primarily  due to additional expenses for TV and
other  print media advertising.  Communications expense increased as a result of
additional  telephone expense.  Increases in professional fees were attributable
to  outsourcing  of  the  Sarbanes  Oxley testing as well as increased legal and
consulting  fees.  Insurance  and tax expense increased for both the three-month
and  six-month  periods  due  to  the  FDIC credit of $96 that was used in 2007.

Income  Taxes
-------------

Income  tax  expense in the second quarter of 2008 totaled $1,170, a decrease of
$505  (30.2%)  over  the second quarter of 2007.  The effective tax rate for the
three  months  ended  June  30, 2008 and 2007 was 32.7% and 36.1%, respectively.
Income  tax expense for the six months ended June 30, 2008 totaled $2,539 for an
effective  tax rate of 33.5% compared to 35.9% for the six months ended June 30,
2007.  The  decrease  in the effective tax rate for both the three and six month
periods  is  primarily  due  to  the increased estimate of state tax credits and
lower  pretax  income  while  tax  exempt  income  has  remained  consistent.


                                       19
<PAGE>
Asset  Quality
--------------

Table  7  which  follows  shows  the  current  and  prior  period  amounts  of
non-performing  assets.  Non-performing  assets  were  $27,689 at June 30, 2008,
compared  to  $5,495  at  December  31,  2007  and  $3,411  at  June  30,  2007.
Significant  changes  from December 2007 to June 2008 include a $224 increase in
non-performing  assets  with  balances  less  than  $100, a $21,970 increase for
customers  with  balances  greater  than $100 due to $22,511 from new nonaccrual
loans,  somewhat  offset  by  a $536 foreclosure as well as payments on existing
nonaccrual loan balances.  The ratio of non-performing assets to total loans and
other  real estate was 2.86% at June 30, 2008, compared to 0.62% at December 31,
2007  and  0.42% at June 30, 2007.  The control and monitoring of non-performing
assets  continues  to  be  a  priority  of  management.

The  increase  in  non-performing  assets  is  comprised  mainly of several loan
relationships  in  the  ADC,  commercial  real estate and 1-4 family residential
mortgage  categories,  including  certain participations purchased.  The primary
reason  for  the  increase is due to current market conditions which have slowed
the  absorption  of builders' completed homes and developed lots along with some
decline  in  property  values.

There  were  no  loans  past  due 90 days or more and still accruing at June 30,
2008,  December  31,  2007  and  June  30,  2007.

<TABLE>
<CAPTION>
                               Table 7 - Non-Performing Assets
                                    (Dollars in thousands)

                                                         June 30,    December 31,    June 30,
                                                           2008          2007          2007
                                                        ----------  --------------  ----------
<S>                                                     <C>         <C>             <C>
Nonaccrual loans                                        $  27,689   $       5,495   $   3,118
Other real estate owned                                         -               -         293
                                                        ----------  --------------  ----------
    Total non-performing assets                         $  27,689   $       5,495   $   3,411
                                                        ==========  ==============  ==========

Loans past due 90 days or more
  and still accruing interest                           $       -   $           -   $       -
                                                        ==========  ==============  ==========

Non-performing assets to total assets                        2.11%           0.45%       0.30%

Non-performing assets to total loans and ORE                 2.86%           0.62%       0.42%

Allowance for loan loss to total non-performing assets      51.73%         214.74%     326.39%
</TABLE>


Allowance  for  Loan  Losses
----------------------------

The  allowance  for  loan  losses represents an allocation for probable incurred
loan  losses  in  the  loan  portfolio.  The  adequacy of the allowance for loan
losses  is  evaluated  periodically  based on a review of all significant loans,
with  particular  emphasis  on


                                       20
<PAGE>
impaired,  non-accruing,  past  due,  and  other  loans that management believes
require  special  attention.  The determination of the allowance for loan losses
is  considered  a  critical  accounting  estimate of the Company.  See "Critical
Accounting  Estimates."

When  reviewing  the allowance for loan losses, it is important to understand to
whom  the  Company lends.  The following table sets forth the composition of the
Company's  loan  portfolio  as  of  June  30,  2008  and  December  31,  2007.

<TABLE>
<CAPTION>
                       Table 8 - Loan Portfolio Composition

                                           June 30,2008        December 31, 2007
                                       ---------------------  -------------------
                                        Amount        %         Amount       %
                                       ---------  ----------  ----------  -------
                                                 (Dollars in thousands)
<S>                                    <C>        <C>         <C>         <C>
Commercial financial and agricultural  $100,096       10.34%  $  93,318    10.57%
                                       ---------  ----------  ----------  -------
Real estate
  Commercial                            262,846       27.15%    236,358    26.78%
  Residential                           197,902       20.44%    190,613    21.59%
  Residential held for sale              19,372        2.00%     11,303     1.28%
  Construction and
    development                         356,900       36.87%    318,438    36.07%
                                       ---------  ----------  ----------  -------
      Total real estate                 837,020       86.46%    756,712    85.72%
                                       ---------  ----------  ----------  -------
Lease financing                              35        0.00%         37     0.00%
Consumer
  Direct                                 25,521        2.64%     25,569     2.90%
  Indirect                                3,728        0.39%      4,237     0.48%
  Revolving                               2,460        0.25%      3,819     0.43%
                                       ---------  ----------  ----------  -------
      Total consumer                     31,709        3.28%     33,625     3.81%
                                       ---------  ----------  ----------  -------
Deferred loan origination fees             (743)      -0.08%       (949)   -0.11%
                                       ---------  ----------  ----------  -------
      Total                             968,117      100.00%  $ 882,743   100.00%
                                       =========  ==========  ==========  =======
</TABLE>

At  June  30, 2008, the loan portfolio is comprised of 86.46% real estate loans.
Commercial, financial and agricultural loans comprise 10.34%, and consumer loans
comprise  3.28%  of  the  portfolio.

Commercial  real  estate  comprises  27.15%  of  the  loan  portfolio  and  is
approximately  half  owner  occupied  properties  where  the  operations  of the
commercial entity provide the necessary cash flow to service the debt.  For this
portion  of real estate loan portfolio, repayment is not dependent upon the sale
of  the  real  estate held as collateral.  Construction and development (36.87%)
has  been  an  increasingly important portion of the real estate loan portfolio.
The Company carefully monitors the loans in this category since the repayment of
these  loans  is  generally  dependent  upon  the sale of the real estate in the
normal  course  of  business  and can be impacted by national and local economic
conditions.  The residential category, 20.44% of the portfolio, represents those
loans  that the Company chooses to maintain in its portfolio rather than selling
into  the  secondary market for marketing and competitive reasons and commercial
loans  secured  by  residential  real  estate.  The  residential  held  for sale
category,  2.00%  of  the  portfolio, comprises loans that are in the process of
being  sold  into  the  secondary  market.  In  these


                                       21
<PAGE>
loans, the credit has been approved by the investor and the interest rate locked
so  that  the  Company  minimizes  credit and interest rate risk with respect to
these  loans.

The Company has no large loan concentrations to individual borrowers.  Unsecured
loans  at  June  30,  2008  were $17.9 million.  While management uses available
information  to recognize losses on loans, future additions to the allowance may
be  necessary  based  on  changes  in economic conditions.  In addition, various
regulatory  agencies,  as  an  integral  part  of  their  examination  process,
periodically  review the Company's allowance for loan losses.  Such agencies may
advise  additions  to  the  allowance based on their judgments about information
available to them at the time of their examination.  Such regulatory guidance is
considered,  and  the  Company  may  recognize  additions  to the allowance as a
result.

Additions to the allowance for loan losses are made periodically to maintain the
allowance  at  an  appropriate level based upon management's analysis of risk in
the  loan  portfolio.  Loans  determined  to be uncollectible are charged to the
allowance  for loan losses and subsequent recoveries are added to the allowance.
A  provision  for  losses in the amount of $1,650 was charged to expense for the
quarter  ended  June  30, 2008 compared to $1,030 for the quarter ended June 30,
2007,  and  $2,921 for the six months ended June 30, 2008 compared to $1,605 for
the  six  months ended June 30, 2007.  The increase in provision for loan losses
for  both  three  and  six  month  periods  is  primarily  due to an increase in
classified/watch  loans,  weaknesses  in  a  few  residential  development loans
participated  with  other banks as well as the provision related to overall loan
growth,  including  the  new  Thrift's  loan  portfolio.  The  increase  in  the
allowance  for  loan  losses as of June 30, 2008 as compared to June 30, 2007 is
primarily  due  to  increases  in  outstanding  loan  balances, increases in the
allowance  applicable  to  specific loans, and increases to the allowance due to
higher  levels  of  Classified  and  Watch-rated  debt  as  well as management's
assessment  of  current  economic  environment.

<TABLE>
<CAPTION>
                      Table 9 - Allowance for Loan Losses
                             (Dollars in Thousands)

                                2008      2007
                              --------  --------
<S>                           <C>       <C>
Beginning balance, January 1  $11,800   $ 9,777
Provision charged to expense    2,921     1,605
Recoveries                        387       413
Loans charged off                (784)     (662)
                              --------  --------
Ending balance, June 30       $14,324   $11,133
                              ========  ========
</TABLE>

At June 30, 2008 the ratio of allowance for loan losses to total loans was 1.48%
compared  to  1.34% at December 31, 2007 and 1.37% at June 30, 2007.  Management
considers  the  current  allowance  for  loan  losses appropriate based upon its
analysis  of  risk in the portfolio, although there can be no assurance that the
assumptions  underlying  such  analysis  will  continue  to  be  correct.


                                       22
<PAGE>
Liquidity  and  Capital  Resources
----------------------------------

The  Company's  liquidity  remains  adequate  to meet operating and loan funding
requirements.  The  loan to deposit ratio at June 30, 2008 was 92.2% compared to
92.7%  at  December  31,  2007 and 90.1% at June 30, 2007.  Deposits at June 30,
2008 and December 31, 2007 include $104,609 and $78,482 of brokered certificates
of deposit, respectively.  The Bank and the Thrift have also utilized borrowings
from  the  Federal Home Loan Bank.  They each maintain a line of credit with the
Federal  Home  Loan  Bank approximating 10% of their total assets.  Federal Home
Loan  Bank  advances  are  collateralized  by  eligible  first  mortgage  loans,
commercial  real  estate  loans  and  investment  securities.  These  borrowings
totaled  $81,000  at  June  30, 2008.  GB&T maintains repurchase lines of credit
with SunTrust Robinson Humphrey, Atlanta, Georgia, for advances up to $20,000 of
which  no  amounts  were outstanding at June 30, 2008.  GB&T has a federal funds
purchased  accommodation  with Silverton Bank, Atlanta, Georgia, for advances up
to  $16,700 and with SunTrust Bank, Atlanta, Georgia for advances up to $10,000,
while  SB&T  has  a  federal  funds purchased accommodation with Silverton Bank,
Atlanta,  Georgia, for advances up to $3,300.  Additionally, liquidity needs can
be  satisfied  by the structuring of the maturities of investment securities and
the  pricing  and  maturities  on  loans and deposits offered to customers.  The
Company  also  uses  retail  securities sold under repurchase agreements to fund
growth.  Retail securities sold under repurchase agreements were $57,911 at June
30,  2008.

Shareholders'  equity  to  total  assets  was 6.93% at June 30, 2008 compared to
7.40%  at  December  31,  2007  and  7.22% at June 30, 2007.  The capital of the
Company  exceeded  all  required  regulatory  guidelines  at June 30, 2008.  The
Company's  Tier  1 risk-based, total risk-based and leverage capital ratios were
10.73%,  11.98%, and 8.74%, respectively, at June 30, 2008.  The following table
reflects  the  current  regulatory  capital  levels  in  more  detail, including
comparisons  to  the  regulatory  minimums.


                                       23
<PAGE>
<TABLE>
<CAPTION>
                        Table 10 - Regulatory Capital Requirements
                                      June 30, 2008
                                  (Dollars in Thousands)



                                                     Required for capital
                                   Actual              adequacy purposes       Excess
                               Amount   Percent      Amount     Percent   Amount  Percent
                              ------------------  ----------------------  ----------------
<S>                           <C>       <C>       <C>           <C>       <C>     <C>
Southeastern Bank Financial
Corporation

Risk-based capital:
  Tier 1 capital              $113,075    10.73%        42,158     4.00%  70,917     6.73%
  Total capital                126,281    11.98%        84,315     8.00%  41,966     3.98%
Tier 1 leverage ratio          113,075     8.74%        51,768     4.00%  61,307     4.74%

Georgia Bank & Trust Company

Risk-based capital:
  Tier 1 capital              $ 93,122     9.87%        37,746     4.00%  55,376     5.87%
  Total capital                104,931    11.12%        75,493     8.00%  29,438     3.12%
Tier 1 leverage ratio           93,122     7.86%        53,307     4.50%  39,815     3.36%

Southern Bank & Trust

Risk-based capital:
  Tier 1 capital              $ 14,052    13.16%         4,270     4.00%   9,782     9.16%
  Total capital                 15,388    14.41%         8,540     8.00%   6,848     6.41%
Tier 1 leverage ratio           14,052    13.30%         4,226     4.00%   9,826     9.30%
</TABLE>

Southeastern  Bank  Financial  Corporation  and Georgia Bank & Trust Company are
regulated  by  the  Department  of  Banking  and Finance of the State of Georgia
(DBF).  The  DBF  requires  that  state  banks  in  Georgia generally maintain a
minimum  ratio  of  Tier  1 capital to total assets of four and one-half percent
(4.5%)  for  banks  and  four  percent  (4%)  for  holding  companies.

Management  is  not  aware  of  any  events or uncertainties that are reasonably
likely  to  have a material effect on the Company's liquidity, capital resources
or  operations.

Commitments  and  Contractual  Obligations
------------------------------------------

The  Company  is  a  party to lines of credit with off-balance sheet risk in the
normal  course  of business to meet the financing needs of its customers.  Lines
of credit are unfunded commitments to extend credit.  These instruments involve,
in  varying  degrees, exposure to credit and interest rate risk in excess of the
amounts  recognized  in  the  financial  statements.  The  Company's exposure to
credit  loss  in  the  event  of  nonperformance  by


                                       24
<PAGE>
the  other  party to the financial instrument for unfunded commitments to extend
credit  and  letters of credit is represented by the contractual amount of those
instruments.  The Company evaluates construction and acquisition and development
loans  for  the  percentage  completed  before extending additional credit.  The
Company  follows  the same credit policies in making commitments and contractual
obligations  as  it  does  for  on-balance  sheet  instruments.

Unfunded commitments to extend credit where contract amounts represent potential
credit  risk totaled $178,966 at June 30, 2008.  These commitments are primarily
at  variable  interest  rates.

The  Company's  commitments  are  funded  through  internal  funding  sources of
scheduled  repayments of loans and sales and maturities of investment securities
available  for  sale  or external funding sources through acceptance of deposits
from  customers  or  borrowings  from  other  financial  institutions.

The  following table is a summary of the Company's commitments to extend credit,
commitments  under  contractual  leases  as  well  as  the Company's contractual
obligations,  consisting  of deposits, FHLB advances, which are subject to early
termination  options,  and  borrowed  funds  by  contractual  maturity  date.

<TABLE>
<CAPTION>
Table 11 - Commitments                                        More
and Contractual Obligations     Less than    1 - 3   3 - 5   than 5
($in thousands)                   1 Year     Years   Years    Years
------------------------------  ----------  -------  ------  -------
<S>                             <C>         <C>      <C>     <C>
Lines of credit                 $  178,966        -       -        -
Lease agreements                       338      623     291      113
Deposits                         1,005,259   39,213   5,449      452
Securities sold under
  repurchase agreements             57,911        -       -        -
FHLB advances                       29,000   32,000       -   20,000
Other borrowings                       400        -       -        -
                                ----------  -------  ------  -------
    Total commitments and
      contractual obligations   $1,271,874  $71,836  $5,740  $20,565
                                ==========  =======  ======  =======
</TABLE>

Although management regularly monitors the balance of outstanding commitments to
fund  loans  to  ensure  funding  availability should the need arise, management
believes  that  the  risk  of  all customers fully drawing on all these lines of
credit  at  the  same  time  is  remote.

Effects of Inflation and Changing Prices
----------------------------------------

Inflation  generally  increases the cost of funds and operating overhead, and to
the  extent  loans  and  other  assets  bear  variable rates, the yields on such
assets.  Unlike  most  industrial  companies,  virtually  all  of the assets and
liabilities  of  a  financial  institution are monetary in nature.  As a result,
interest  rates  generally  have  a  more  significant  impact  on


                                       25
<PAGE>
the performance of a financial institution than the effects of general levels of
inflation.  Although  interest  rates  do  not  necessarily  move  in  the  same
direction  and to the same extent as the prices of goods and services, increases
in  inflation generally have resulted in increased interest rates.  In addition,
inflation  can  increase  a  financial  institution's cost of goods and services
purchased,  the  cost  of  salaries  and benefits, occupancy expense and similar
items.  Inflation and related increases in interest rates generally decrease the
market  value  of investments and loans held and may adversely affect liquidity,
earnings, and stockholders' equity.  Mortgage originations and refinancings tend
to  slow  as interest rates increase, and can reduce the Company's earnings from
such  activities  and  the income from the sale of residential mortgage loans in
the  secondary  market.

Item  3.  Quantitative  and  Qualitative  Disclosures  About  Market  Risk

As  of  June  30,  2008,  there were no substantial changes in the interest rate
sensitivity  analysis or the sensitivity of market value of portfolio equity for
various  changes  in  interest  rates  calculated  as of December 31, 2007.  The
foregoing  disclosures  related to the market risk of the Company should be read
in  conjunction  with  the  Company's audited consolidated financial statements,
related  notes  and  management's discussion and analysis of financial condition
and  results  of operations for the year ended December 31, 2007 included in the
Company's  2007  Annual  Report  on  Form  10-K.

Item  4.  Controls  and  Procedures

As  of  the end of the period covered by this report, the Company carried out an
evaluation,  under  the  supervision and with the participation of the Company's
management,  including  the  Company's  President  and  Chief  Executive Officer
(principal  executive  officer) and its Group Vice President and Chief Financial
Officer  (principal  financial  officer), of the effectiveness of the design and
operation  of  the  Company's  disclosure  controls  and  procedures pursuant to
Exchange  Act  Rule 13a-15.  Based upon that evaluation, such officers concluded
that  the  Company's  disclosure controls and procedures are effective in timely
alerting  them  to  material  information relating to the Company (including its
consolidated  subsidiaries)  that  is  required  to be included in the Company's
periodic  filings  with the Securities and Exchange Commission.  There have been
no changes in the Company's internal controls or, to the Company's knowledge, in
other  factors  during  the  quarter covered by this report that have materially
affected,  or are reasonably likely to materially affect, the Company's internal
controls  over  financial  reporting.


                                       26
<PAGE>
                                    Part II
                               OTHER INFORMATION


Item  1.       Legal  Proceedings

               There  are  no  material  pending  legal proceedings to which the
               Company  or any of its subsidiaries is a party or of which any of
               their  property  is  subject.

Item  1A.      Risk  Factors

               In  addition  to  the  other  information  set  forth  in  this
               report,  you  should  carefully consider the factors discussed in
               Part I, "Item 1A. Risk Factors" in the Company's Annual Report on
               Form  10-K  for  the  year  ended  December 31, 2007, which could
               materially  affect  its  business,  financial condition or future
               results.  The  risks  described in the Annual Report on Form 10-K
               are  not  the only risks facing the Company. Additional risks and
               uncertainties  not  currently  known  to  management  or  that
               management  currently  deems to be immaterial also may materially
               adversely  affect  the  Company's  business,  financial condition
               and/or  operating  results.

Item  2.       Unregistered  Sales  of  Equity Securities and Use of Proceeds

               Issuer Purchases of Equity Securities

               The  following  table  sets  forth  information  regarding  the
               Company's purchases of its common stock on a monthly basis during
               the second quarter of 2008. No shares were repurchased during the
               second  quarter.

<TABLE>
<CAPTION>
                                                                  Maximum Number
                                           Total Number of        (or Appropriate
                   Total                  Shares (or Units)      Dollar Value) of
                 Number of   Average    Purchased as Part of   Shares (or Units) Yet
                  Shares    Price Paid   Publicly Announced     Be Purchased Under
Period           Purchased  Per Share     Plans or Programs    the Plans or Programs
---------------  ---------  ----------  ---------------------  ---------------------
<S>              <C>        <C>         <C>                    <C>
April 1 through
April 30, 2008           -           -                 25,549                 74,451
---------------  ---------  ----------  ---------------------  ---------------------
May 1 through
May 31, 2008             -           -                 25,549                 74,451
---------------  ---------  ----------  ---------------------  ---------------------
June 1 through
June 30, 2008            -           -                 25,549                 74,451
---------------  ---------  ----------  ---------------------  ---------------------
Total                    -           -                 25,549                 74,451
---------------  ---------  ----------  ---------------------  ---------------------
</TABLE>

               On  April  15,  2004,  the  Company announced the commencement of
               a  stock repurchase program, pursuant to which it will, from time
               to  time,


                                       27
<PAGE>
repurchase  up to 100,000 shares of its outstanding stock.  The program does not
have  a  stated  expiration  date.  No stock repurchase programs were terminated
during  the  second  quarter  of  2008.

Item  3.       Defaults  Upon  Senior  Securities

               Not  applicable

Item  4.       Submission  of  Matters  to  a  Vote  of  Security  Holders

          (a)  The Annual  Meeting  of  Shareholders  was  held  on  April  23,
               2008  at  the  Company's Cotton Exchange office located at 32 8th
               Street,  Augusta,  Georgia.

          (b)  The following  directors  were  elected  for  a  term of one year
               and  until  a  successor  is  duly  qualified  and  elected:

                   William  J.  Badger
                   R.  Daniel  Blanton
                   Warren  Daniel
                   Edward  G.  Meybohm
                   Robert  W.  Pollard,  Jr.
                   Larry  S.  Prather,  Sr.
                   Randolph  R.  Smith
                   Ronald  L.  Thigpen
                   John  W.  Trulock,  Jr.
                   W.  Marshall  Brown
                   Patrick  D.  Cunning

          (c)  The following  matters  were  voted  on  at  the  meeting  as was
               previously  identified  in  the Proxy materials forwarded to each
               shareholder:

               1.   Proposal  to  elect  the  eleven  individuals  nominated  by
                    management  as  Directors.

                    Votes  were  cast  as  follows:

               Director                 For        Withhold
               --------                 ---        --------
               William J. Badger        4,799,407     3,355
               R. Daniel Blanton        4,796,907     5,855
               Warren Daniel            4,799,407     3,355
               Edward G. Meybohm        4,799,407     3,355
               Robert W. Pollard, Jr.   4,796,907     5,855
               Larry S. Prather, Sr.    4,799,407     3,355
               Randolph R. Smith, M.D.  4,796,907     5,855
               Ronald L. Thigpen        4,794,391     8,371
               John W. Trulock, Jr.     4,799,407     3,355
               W. Marshall Brown        4,799,407     3,355
               Patrick D. Cunning       4,799,407     8,371


                                       28
<PAGE>
Item 5.        Other Information

               None

Item 6.        Exhibits

               31.1 Certification  of  Chief  Executive  Officer  Pursuant  to
                    Section  302  of  the  Sarbanes-Oxley  Act  of  2002.

               31.2 Certification  of  Chief  Financial  Officer  Pursuant  to
                    Section  302  of  the  Sarbanes-Oxley  Act  of  2002.

               32.1 Certification  of  Chief  Executive  Officer  and  Chief
                    Financial  Officer  Pursuant  to  Section  906  of  the
                    Sarbanes-Oxley  Act  of  2002.


                                       29
<PAGE>
                    SOUTHEASTERN BANK FINANCIAL CORPORATION
                              Form 10-Q Signatures


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                    SOUTHEASTERN BANK FINANCIAL CORPORATION



Date:  August 11, 2008                       By: /s/ Darrell R. Rains
       ---------------                           --------------------
                                             Darrell R. Rains
                                             Group Vice President, Chief
                                             Financial Officer (Duly Authorized
                                             Officer of Registrant and Principal
                                             Financial Officer)


                                       30